Inspiration

Saleable Instructions Using Variable Price Ranging

RAT 58 (Rawlings Agency Tip)

VALUATION. Possibly the most critical issue in estate agency. The issue is of course not how you arrive at the right price, but how you convince the vendor to quote the right asking price from day one.

Whilst there are many tips and ideas which work really well, one of the most effective for this particular market is VPR – the Variable Price Range, especially when applied to a more unusual property. Some of my clients swear by it – both in terms of getting the instruction, and making it quickly saleable!

I’m going to explain this in some detail, so you gain full understanding, but in practice the explanation can be simplified.

Let’s say you think the property is definitely worth £300,000. But you know one of your competitors will probably go in at £330,000 to get the instruction. And then it won’t sell because it did not attract the right buyers. So you say to the client:

“Mr Vendor, in this market I think it would be irresponsible of me to say your house is worth precisely x amount. However, we are currently using a new strategic pricing technique that is proving very effective at maximizing your sale price within a convenient timescale. It’s called Variable Price Ranging and it works like this:

“Our job is to maximize the number of suitable buyers who look at your property, but we know that too high a price will frighten the best ones away. Too low a price and we’ll have people fighting over it. Clearly we’d like to have the best of both worlds. And we can.

“We suggest that you quote a “price range of £275,000 - £325,000” (don’t worry Mr. Vendor, were not going to sell it for £275,000) and invite best and final offers from all interested parties. The most likely buyer for your house is someone looking at the bottom half of this price range who will be impressed with your house, and will stretch themselves to buy it and won’t let anything get in their way. They will feel they are buying a house worth as much as £325,000, but would not even have looked at it if the asking price had been £325,000. And of course it is the best one they will have seen because most of the others they will have been offered in their £275,000-£300,000 price range are overpriced.

“This method certainly generates viewings. We then invite these buyers to submit their best and final offer in writing, much as they do in Scotland (where incidentally they typically receive an average of 21% over their quoted price).

“This technique is the best way of flushing out that one buyer who might just pay a premium for a house like this, without losing out on the bulk of buyers who will pay market value, but may not otherwise have seen it.

"So within two to three weeks, our marketing, combined with strategic pricing, should deliver a handful of written offers and we can then discuss which one would be the best one to accept or negotiate further. How does that sound to you?”

I recommend your suggested price range should be about 9% below and 9% above your “true” value. Don’t be tempted to make the lower figure in the range your actual value. BIG MISTAKE! The idea is effectively to quote a really attractive low price, whilst also impressing the client with a higher possible price – with the market itself quite rightly determining the correct price somewhere in the middle.

As I said, it does seem a bit long-winded but if you’d like some training in how to use this, and many other such techniques (supported by easily understood visuals) then please do not hesitate to contact me (contact details bottom left of this page)

By the way, did you know that you can now get up to 50% of your training costs covered by easily-accessed government funding? Click here to find out more

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© Richard Rawlings 2010
Richard Rawlings is the founding director of Estate Agency Insight, which specialises in helping estate agencies harness opportunity through innovative method, marketing, publicity, and training. He can be contacted at or on 0845 838 1354.

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